German business is worried that conservative Chancellor Angela Merkel's commitment to radical reforms in Europe's biggest economy may be fading, and fears she could even reverse some changes to keep voters happy.
Solid economic growth and falling unemployment mean Ms Merkel's reform agenda has lost speed and ground to a halt, and now her Social Democrat (SPD) coalition partners are pushing her to adopt more socially orientated policies.
The SPD passed new resolutions last weekend aimed at winning back leftist support, and a leadership meeting of her left-right coalition on Sunday will give clues to whether Ms Merkel will fight for further reforms - or at least resist their unwinding.
"It looks as if Ms Merkel has gone soft and the SPD is calling the shots - that is bad for Germany, especially as the SPD has just taken a turn to the left," said an official at a leading German industry group, requesting anonymity.
Ms Merkel, once likened to Britain's Margaret Thatcher, has pushed through measures to raise the retirement age, consolidate the budget and cut corporation tax in her first two years in office, but has fallen short of what business had hoped for.
Her awkward "grand coalition" with the SPD is partly to blame. Had she entered government with her favoured partner, the liberal Free Democrats, Merkel would have had an easier time pushing through reforms.
But business faults her for focusing too much on coalition harmony and too little on policy. Her plans to protect domestic firms from foreign influence and the focus on human rights in foreign policy at the expense of business have irritated investors in recent months.
The US weekly Newsweek splashed a picture of a glum-looking Ms Merkel on its cover last week titled Lost Leader.
Many of her Christian Democrat (CDU) supporters are waiting anxiously for Merkel's response to the perceived leftward swing of her coalition partner. Last weekend the SPD - trying to win back traditional supporters from the far-left Left Party - passed several resolutions which are awkward for Ms Merkel.
She now has to choose between going along with the SPD and effectively abandoning further market-friendly policies, and starting a fight which could put the coalition at risk.
Ms Merkel may be keener to keep voters happy ahead of the 2009 election than to push the case for radical reform.
"Germany is not out of the woods. The next downturn will come and politicians should be preparing for that," Klaus Braeunig of the BDI industry federation said. "Instead, we see politicians put the duration of the upturn at risk."
One SPD resolution likely to go ahead is a reversal of part of the "Agenda 2010" programme of labour reforms introduced in 2003-04 by then-Chancellor Gerhard Schroeder, a Social Democrat.
The SPD wants to extend full jobless benefits to older people, a move it says could cost about €800 million. Some economists estimate the cost at up to €2.5 billion and say the about-turn would send a dangerous message to investors.
Ms Merkel has put up little resistance, saying only that costs must be contained.
"This is the wrong signal," said Citigroup economist Juergen Michels. "I hope it is tactical - trying to water down some policies in response to pressure from the Left Party. But there is a risk there really will be a shift to the left."
At the weekend the SPD effectively torpedoed plans to partly privatise rail operator Deutsche Bahn which could have attracted new investment to Germany. It is also trying to increase the minimum wage and rescind cuts in commuter tax breaks.
Business concerns go beyond economic policy to Ms Merkel's emphasis on human rights in dealings with China and Russia.
Her private meeting last month with the Dalai Lama, Tibet's exiled spiritual leader, has raised tensions with China - a crucial market for German firms.
Juergen Hambrecht, head of BASF and chairman of Germany's Asia-Pacific Committee, has described the meeting as "tactless" and the influential weekly Spiegel said her strategy was handing Russian and Chinese business to foreign companies.
Some firms are also worried about Ms Merkel's plans to rein in the influence of state wealth funds set up by China, Russia and Middle Eastern nations to invest abroad.